4 ms·

What you’re saying doesn’t make sense, because the price of a single asset is not a closed system - it exists in the market, which is full of variable interacti

by dsacco 9y ago

What you’re saying doesn’t make sense, because the price of a single asset is not a closed system - it exists in the market, which is full of variable interactions. Concretely: for any asset appreciating in value, you can earn interest on it. This interest comes at the cost of personal liquidity, but not personal value - indeed, interest and asset appreciation are going to be positively correlated. While the single dimension of buy and sell price for any asset can be negative sum if it depreciates after your purchase, whether or not the complete value of the asset is net positive or net negative is a function of 1) the quantifiable advantages, like (but not necessarily) dividends or risk reduction, and 2) the amount of time spent holding it. This second point is also why the frequency of price changes (and net change in any discrete measure of time) is a very important part of the analysis.

Retric 9y ago
Actual gold has physical storage costs aka a bank vault etc, those costs must be paid making gold negative sum. Say I buy 1,000,000$ worth of gold and agree the vault owner can sell gold to cover the costs for the next 100 years. Alternatively, I can spend 1,000,000$ but get less than 1,000,000$ worth of gold to pay for the vault. In either case in 100 years someone needs to keep paying for the vault. Any finite amount of gold is not enough to pay for it's storage costs forever. PS: You can spend less on security but you risk having nothing of it's stolen. Given enough time and it will be.
- dsacco 9y ago
  > Actual gold has physical storage costs aka a bank vault etc, those costs must be paid making gold negative sum. You can quantify those costs for the same measures of time that I keep talking about in this thread. As I keep saying: the cost of storing the asset is economically, demonstrably lower than the value of the asset for any meaningful, discrete timespan. > PS: You can spend less on security but you risk having nothing of it's stolen. Given enough time and it will be. By this logic, literally everything is negative sum according to thermodynamics. You’re not using a reasonable, accepted definition for this concept in the context of game theory. We know the heat death of the universe is going to happen, so does that mean the aggregate activity of the market is negative sum? This isn’t just incorrect, it’s incoherent.
  - Retric 9y ago
    No, what you're missing is positive sum interactions are transformative. I want gasoline for my car even if the raw oil it comes from contains more energy that oil is less useful. Gold sitting in a vault stays gold sitting in a vault the outputs are identical in form and lower in amount. PS: A bank safety deposit box costs ~60$ a year store 1,000$ worth of gold for 20 years and you lost money unless it's worth more than twice as much inflation adjusted. Store 1,000,000$ worth of gold costs more than 60$ / month, but not 1000x more so it's not as pointless.

by dsacco 9y ago

Retric 9y ago

Actual gold has physical storage costs aka a bank vault etc, those costs must be paid making gold negative sum. Say I buy 1,000,000$ worth of gold and agree the vault owner can sell gold to cover the costs for the next 100 years. Alternatively, I can spend 1,000,000$ but get less than 1,000,000$ worth of gold to pay for the vault. In either case in 100 years someone needs to keep paying for the vault. Any finite amount of gold is not enough to pay for it's storage costs forever. PS: You can spend less on security but you risk having nothing of it's stolen. Given enough time and it will be.

dsacco 9y ago
> Actual gold has physical storage costs aka a bank vault etc, those costs must be paid making gold negative sum. You can quantify those costs for the same measures of time that I keep talking about in this thread. As I keep saying: the cost of storing the asset is economically, demonstrably lower than the value of the asset for any meaningful, discrete timespan. > PS: You can spend less on security but you risk having nothing of it's stolen. Given enough time and it will be. By this logic, literally everything is negative sum according to thermodynamics. You’re not using a reasonable, accepted definition for this concept in the context of game theory. We know the heat death of the universe is going to happen, so does that mean the aggregate activity of the market is negative sum? This isn’t just incorrect, it’s incoherent.
- Retric 9y ago
  No, what you're missing is positive sum interactions are transformative. I want gasoline for my car even if the raw oil it comes from contains more energy that oil is less useful. Gold sitting in a vault stays gold sitting in a vault the outputs are identical in form and lower in amount. PS: A bank safety deposit box costs ~60$ a year store 1,000$ worth of gold for 20 years and you lost money unless it's worth more than twice as much inflation adjusted. Store 1,000,000$ worth of gold costs more than 60$ / month, but not 1000x more so it's not as pointless.